The first indications of how the world economy will react to last week’s cataclysmic events in the US will be seen this morning, when the country’s stock markets come back on line.

In the six days that have elapsed since Tuesday, feverish activity has been taking place in the world’s money supply markets, aimed at maintaining investor confidence in the US and avoiding a downward spiral into recession. As part of this effort, as early as Wednesday, world banks including the European Central Bank began pumping money into the markets to keep them functioning. The ECB instantly lent $63 billion to the markets and the Bank of Japan said it would supply almost $17 billion – the main priority at this early stage being to keep markets functioning in the immediate aftermath of the attack.

As operations begin to normalise, the central banks are now expected to instigate a wave of interest rate cuts to fend off recession. However, even before last Tuesday, the world economic outlook was looking far from positive owing to the rapid slowdown in the US economy. For the US and the world, it is imperative that the markets send a positive signal when trading restarts today.